Question

Which of the following statements about the law of diminishing returns are Correct? pick one

1. The law of diminishing returns says that a firm’s marginal cost curve will eventually slope upwardly as it produce more and more output.
2. The existence of fixed inputs ensures that the law of diminishing returns will eventually set in as more variable inputs are added to the production.
3. The law of diminishing returns ensures that diseconomies of scale will eventually set in as more inputs are added to the production.
4. The concept of law of diminishing returns is applicable only to the short-run analysis.

Answer 1

Which of the following statements about the law of diminishing returns are correct?

Ans. A) The law of diminishing returns says that a firm's marginal cost curve will eventually slope upward as it produce more and more output.

Eventually, rising marginal cost will lead to a rise in average total cost.